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AOL closes billion-dollar deal with Microsoft, selling most of its patents

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AOL and Microsoft have completed a deal to transfer 800 patents to Microsoft in exchange for about $1 billion.

Microsoft Logo (Verge Stock)
Microsoft Logo (Verge Stock)

A $1.056 billion agreement that transfers about three-quarters of AOL's patent portfolio to Microsoft has been completed, the companies announced today. Over 800 of AOL's 1,100 patents now belong to Microsoft, and Microsoft has a non-exclusive license to the remainder. AOL will also retain a license to what it's sold. Microsoft will be using its new intellectual property in a deal with Facebook, building on a number of social networking inventions from AOL's earlier days as a web platform. Other patents cover advertising, search, mapping, media streaming, and security.

AOL, meanwhile, has hinted subtly that it wants to increase its value to shareholders. "The closing of this transaction represents another major step for AOL in increasing value for our shareholders," it said in a statement. "You should expect us to continue our momentum of creating and unlocking shareholder value... to return more value to shareholders and... create long-term shareholder value." AOL expects to release more details by the end of the month, but it confirms that 100 percent of the proceeds will go back to stockholders. The company has already all but jettisoned its best-known web tool, so it will now use this money to work on attracting investors for its substantial content network.